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Phosphates Market Outlook 2012
TFI Fertilizer Technology & Outlook Conference St Petersburg, Florida
16 November 2011
Profercy
Profercy Phosphates & NPKs
• Price discovery, forecasting; Publication• 2 years clocked up; but 15 years experience
What we do
• Market today – Price Tracking (all P2O5)• Price Forecasts & S/D Modelling• Longer-term Outlook Research• Costs & competitiveness, Entry cost
Short-term Specifics, & Supplier Tactics◦ 2012-13 A turning point
◦ Capacity changes: Saudi, USA, Morocco, Brazil
◦ Buyer deferral vs destruction
Long-term Outlook & Industry Strategies◦ Integration, stand-alone, off-shore jvs?
◦ Determining the P2O5 destiny
China export policy (but loopholes exist) Arab Spring; rock exports; hits Europe Florida rock litigation, duration, US imports
With both industry and importer pipeline stocks thin on both sides of the equation, further supplyshocks are powerful.
Rock prices are up 50% in 18 months
200
250
300
350
400
450
500
550
600
650
700
$ pt
fob
Tam
pa
Challenges Finite resources Food, Feed & Energy Environment High entry cost
Consequences Supply squeeze Price rises New capacity delays
200
250
300
350
400
450
500
550
600
650
700
$pt f
ob T
ampa
3 India contracts; 3 corrections
a.
b.
Conjecture
Demand India, Brazil (driven back to DAP/MAP?) , US imports,
Supply China policy conf, US output? More Arab Spring rock impact?
1.65 mt net increase would restore world trade total to 2010 @ 25mt (D/MAP/TSP)
DAP/MAP/TSP & Equiv (million tonnes)
Gains + Impact +/- Losses -
Saudi Exports +1.9 -1.5 China Exports (DAP equiv. all prods)
Tunisia return +0.6 -0.2 US Exports (Agrifos)
Tunisia phosacid (India jv) +0.3
Brazil MAP/TSP +0.4
Egypt TSP +0.15
Gains total +3.35 -1.70 Losses total
Net impact +1.65
*Bayovar first full year
0
200
400
600
800
1000
1200
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2006 2007 2008 2009 2010 2011 f 2012 f 2013 f
DAP: $ pt fob
Tam
pa & cfr In
dia
'000t P
2O5 in DAP
& NP/Ks
NP/K Imports DAP imports Local NP/K prodn Local DAP prodn DAP $pt cfr India DAP $pt fob Tampa
3.7mt P2O5
= 8mt DAP
250
300
350
400
450
500
550
600
650
700
0
20
40
60
80
100
120
$ pt
fob
Tam
pa
% Ex
port
tax
Export tax (mid 2011 flexi-tax) Export tax (anticpated 2012) DAP fob Tampa
0
3
6
9
12
15
18
21
million tonn
es P2O
5
Rock Exports
Acid‐based NPKs, TSP
SSP/FMP
MAP
DAP
Rock avail for ferts
0
200
400
600
800
1,000
1,200
1,400
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
$pt D
AP fo
bTampa
'000t P
2O5
NPs TSP MAP DAP DAP $ pt fob US
1.5mt DAP equ.
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
100
150
200
250
300
350
400
450
500
550
600
650
700
Kt DAP
, MAP
com
bine
d
$ pt fo
b Tampa
Production Tampa DAP $pt pt fob Producer stocks (right axis)
2005
Phosacid DAP, MAP, TSPConcentrate
2010
Middle East instability New & growing exports: Peru, Egypt Russia export squeeze China concentrate export collapse,
export taxation USA production challenges
0
2
4
6
8
10
12
14
16
million tonn
es produ
ct
Regular output Production 2010
OCP 28 m
Top 5 rock producers control 32% of total world output
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
2006 2007 2008 2009 2010 2011f 2012f
% Produ
ction to Export
Milliontonn
es & $pt fo
bMorocco
(30%
P2O
5)
World Production Exports Local processing % Production to Export
Net Impact: Cumulative Capacity Changes Kt
New capacity +38,115 (incl Florida, China, Saudi, Peru*, Jordan, Russia,Brazil, Tunisia, Kazakhstan
Likely depletions -12,900
Total +25,215 (+12.5% vs 2010 @ 200m tonnes or CAGR 4%
Phosphate Rock Mine Depletion
2011-13 Kt Company, Location Destiny
2011 6,000 Mosaic, South Fort Meade, Florida, US ID*
2011 500 Mosaic, Hopewell, Florida, US ID
2013 900 Agrium, Kapuskasing, Ontario, Canada ID
2012-13 5,500 China, various South China, Sichuan, Hubei ID
Total -12,900
*Bayovar first full year
200
300
400
500
600
50
55
60
65
70
75
80
85
90
2005 2006 2007 2008 2009 2010 2011 2012f 2013f 2014f 2015f
RMB pt fo
t ex works
million tonn
es
Exports Domestic Shipments Production Domestic price (year ending)
500
600
700
800
900
1000
1100
0
1000
2000
3000
4000
5000
6000
7000
8000
9000'000t
DAP/MAP000tRock
Monthly US Rock Output Monthly DAP/MAP Output
Railway: $1.20bnMitsui & Barclay Mowen won contract to build the 1,500km link, one of the earliest contract awards in early
2007. The initial cost estimate was $770m.Mine: $400mBeneficiation plant: $350m
China’s Guizhou Hongfu Industry Co (Wengfu) awarded $350m contract for beneficiation plant to process ore into 4.6 m tpa of dry concentrate.
Power, Substation & Desalination plants $280m & $100mKorea's Hanwha awarded contract for power and desalination plants at Ras al Khair. Desalination unit
processes max. 40,000m³ of water per day. According to power configuration, Ma’aden may be net supplier to local grid
Ammonia plant: $950mSamsung EPC contractor for 3,300t/day capacity ammonia plant, in turn selecting Uhde for process license
& basic engineering for single-train unit.Phosphoric acid plants: Litwin $525mLitwin built 3 phosacid plants, total capacity of 1.45m tpa P2O5. Litwin selected Tekfen for construction
services & Yara semi-hydrate process technology.Sulphuric acid plant: Outotec $270mFinland's Outotec built the world's largest sulphuric acid facility; output capacity 13,500tpd at Ras al Khair.
All acid is used in the captive process.DAP plant: Dragados (value not disclosed, but thought near $500m)Four DAP granulation trains total 2.95m tpa DAP
Ma’aden investment breakdown
Year Cost US $bn
2007-11 EPC contracts (breakdown opposite) 4.54
2008 Financing costs 0.98
Total cost 5.52
Equity
2008 Ma'aden & Sabic (respectively 70%/30%) 1.66
Finance agreements2
Conventional and Islamic facilities1 2.06
Saudi Public Investment Fund 1.07
Export-Import Bank of Korea 0.40
Korean Export Insurance Corporation 0.20
Saudi Industrial Development Fund 0.13
Total investment 5.52
0.2
0.21
0.22
0.23
0.24
0.25
2
3
4
5
6
7
8
Arab
le land
/cap
*
Popu
latio
n (bn)
Arable Land ha/cap Population Developed Population Developing
10
15
20
25
30
1,700
1,900
2,100
2,300
2,500
% stocks‐to‐use
'000
tonn
es
Production Consumption Stocks‐to‐use ratio (%, right axis)
Main Assumptions Agri-sector fundamentals to remain robust China export controls strict through 2012 Ma’aden challenged; Exports thus far absorbed India attempted to split market again; but found limited scope How may India tactics be modified in 2012? US DAP output maxed out in 2011: What level in 2012? Scope for further US capacity reductions? May restrict US exports; lift competition for merchant DAP Litigation & EPA Florida Environmental Impact Study Proceeds
Thank you
More coverage:
Profercy Phosphates & NPKs(Daily, Weekly & Monthly)
Profercy Phosphates Horizon 2015
Profercy
[email protected] www.profercy.com